THQ 2012 Annual Report Download - page 3

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In the first half of fiscal 2012, our core games,
including MX vs. ATV Alive, Red Faction:
Armageddon and Warhammer 40,000: Space
Marine, failed to perform to our creative and
financial expectations. In our fiscal third quarter,
the uDraw GameTablet was released on the Wii
and HD consoles for the holiday season, following
its resounding success in the prior fiscal year, and
also performed far weaker than anticipated. The
combination of these events had a significant
negative effect on our financial performance.
These challenges overshadowed successes
that are indicative of the kind of high quality,
connected core gaming experiences that we
intend to deliver in the future.
Saints Row: The Third, which achieved a Metacritic
score of 83, continued to demonstrate the
exceptional appeal of this powerful franchise. We
have shipped more than 4.5 million units to date of
this game and the robust digital content offerings
have resulted in the highest digital revenue of any
console title in our history. In fact, our Saints Row
downloadable content offering helped grow our
digital revenues by 62% year-over-year.
We launched WWE ’12 in November and
Dear Fellow Stockholders,
The 2012 fiscal year was a difficult one for THQ. The disappointing results
of a few of our products, exacerbated by shifting market conditions, had a
negative impact on our profitability. While our net sales of $835.9 million
rose four percent from one year ago, we reported a net loss of $97.4 million
compared with a net loss of $16.0 million in fiscal 2011*.
In December, we realized we had to make some significant changes to our
business. Since then, we have taken a number of significant and meaningful
steps to put THQ back on the path to profitability.
Today, THQ is undergoing a critical transformation. Based on changing game markets and consumer trends,
we reevaluated our business, cut underperforming segments, and implemented a sizable realignment to
better match our costs to revenue. We are now an interactive entertainment company focused on creating
the highest quality gaming experiences across multiple channels. Perhaps most importantly, we hired a
talented new President to drive implementation of this strategy. These were no small endeavors and we
have made significant progress.
Despite our progress, we know we have work to do. But with a focused product plan and leaner cost
structure, we are well positioned to deliver our highly-anticipated pipeline of games to market in fiscal
2013 and beyond.
As noted above, we recently welcomed industry veteran Jason Rubin to THQ, who joined the company
as President in May 2012. As one of the most creative forces in the video game industry with over 40
million units sold of games under his direction, Jason brings to THQ a fresh point of view on our intellectual
properties and their potential, and how we can successfully navigate the changing tide ahead.
*Non-GAAP results. A reconciliation of non-GAAP to GAAP results is provided in the financial tables following the Form 10-K in this annual report.
Fiscal 2012 in Review